Section 361 of Companies Act, 2013 – Summary procedure for liquidation

SECTION 361. SUMMARY PROCEDURE FOR LIQUIDATION

[Effective from 15th December, 2016]

(1) Where the company to be wound up under this Chapter,—

(i)   has assets of book value not exceeding one crore rupees; and

(ii)   belongs to such class or classes of companies as may be prescribed,

the [1] [Central Government] may order it to be wound up by summary procedure provided under this Part.

(2) Where an order under sub-section (1) is made, the [1]  [Central Government] shall appoint the Official Liquidator as the liquidator of the company.

(3) The Official Liquidator shall forthwith take into his custody or control all assets, effects and actionable claims to which the company is or appears to be entitled.

(4) The Official Liquidator shall, within thirty days of his appointment, submit a report to the [1] [Central Government] in such manner and form, as may be prescribed, including a report whether in his opinion, any fraud has been committed in promotion, formation or management of the affairs of the company or not.

(5) On receipt of the report under sub-section (4), if the [1] [Central Government] is satisfied that any fraud has been committed by the promoters, directors or any other officer of the company, it may direct further investigation into the affairs of the company and that a report shall be submitted within such time as may be specified.

(6) After considering the investigation report under sub-section (5), the [1] [Central Government] may order that winding up may be proceeded under Part I of this Chapter or under the provision of this Part.

Applicable Rules

Companies (Winding Up) Rules, 2020

[Effective from 1st April, 2020]

PART V

SUMMARY PROCEDURE FOR LIQUIDATION

Rule 190. Powers and functions of Official Liquidator.—(1) The Official Liquidator shall exercise the powers and perform the duties as specified in the Act and these rules.

(2) For the purpose of clause (ii) of sub-section (1) of section 361 , the class of companies shall be as under, based on the latest audited Balance Sheet:-

(a) the company which has taken deposit and total outstanding deposits is not exceeding twentyfive lakh rupees; or

(b) the company of which the total outstanding loan including secured loan does not exceed fifty lakh rupees; or

(c) the company of which turnover is upto fifty crore rupees; or

(d) the company of which paid up capital does not exceed one crore rupees.

(3) The Official Liquidator shall maintain the Registers and books of accounts in the manner provided in rules 79 and 80.

(4) For the purpose of filing and audit of the Official Liquidator’s accounts, the procedure laid down in the preceding rules 91 to 99 shall be followed with the modification that wherever the word Tribunal is mentioned, it shall be read as Central Government and with further directions issued by the Central Government as may be necessary, from time to time.

(5) The Official Liquidator shall dispose of all the assets in the manner as described in preceding rules 165 to 167 with the modification that wherever the word Tribunal is mentioned, it shall be read as Central Government and with further directions issued by the Central Government as may be necessary, from time to time.

(6) The monies received by the Official Liquidator as referred to in section 349 shall be paid by him into the public account of India in the Reserve Bank of India as mentioned in that section not later than the next working day of the said Bank.

(7) For the purposes of section 363, the creditors of the company shall prove their claim in the manner as provided under rules 100 to 125, with the modification and directions by Central Government as mentioned in sub-rule (4).

(8) In the absence of any rules under this Part, on any subject for conduct of liquidation proceeding by the Official Liquidator, the relevant rules in the other Parts of these rules shall be followed with necessary modifications as directed by the Central Government.

[1] Powers of Central Government delegated to Regional Director vide Notification No. No. S.O. 4090(E) dated 19th December, 2016.